Lipid dispersions in water have provided useful information about the possible physical states and structure of these lipids in cell membranes. Thermodynamic analyses of these systems have been limited by the generally low water solubility of the lipids. This limitation has been circumvented by development of surface tension methods and the use of the Gibbs equation for relating the chemical potentials of the lipid dispersions to the surface tension. These methods have been applied to lecithin dispersions in water to evaluate the relative internal energies of the various condensed states of lecithin in water. The method has also been applied to verify the presence of a lecithin/cholesterol 2:1 complex in water which can exist in equilibrium with either an excess of lecithin or an excess of cholesterol. Formation of the lecithin-cholesterol complex in water was reported last year, and these studies have been continued to further characterize the physical properties of the complex. The NMR spectrum of the complex was monitored as a function of temperature and indicates that the mobility of the hydrocarbon chain protons is intermediate between the gel and liquid-crystalline states of pure lecithin.